SERRANO V. CENTRAL BANK ET AL., G.R. NO.

L-30511, February 14, 1980

justice bakit
Facts:
● The case is a petition for mandamus and prohibition with preliminary injunction that
seeks the establishment of joint and solidary liability to the amount of Php 350,000
against respondents Central Bank (CB) and Overseas Bank of Manila (OBM) and its
stockholders.
● On October 13, 1966 and December 12, 1966, petitioner Manuel Serrano made a time
deposit of one year with 6% interest of 150,000 to respondent OBM. On August 31,
1968, Concepcion Maneja, assigned and conveyed to petitioner her time deposit of
200,000 with respondent OBM, making petitioner’s time deposit total to 350,000.
● Notwithstanding series of demands for encashment of these time deposits from OBM,
dating from December 6, 1967 up to March 4, 1968, not a single one of the time deposit
certificates was honored by OBM.
● In a decision in G.R. No. L-29352, where OBM sought to prevent CB from closing,
declaring it as insolvent, and liquidating its assets, the Court directed the suspension of
CB operation in ordering the liquidation of OBM. Because of this decision, petitioner
filed this instant petition praying for a decision on the merits, adjudging respondent
Central Bank jointly and severally liable with respondent Overseas Bank of Manila to the
petitioner for the P350,000 time deposit made with the latter bank, with all interests
due therein; and declaring all assets assigned or mortgaged by the respondents
Overseas Bank of Manila and the Ramos groups in favor of the Central Bank as trust
funds for the bene􏰊t of petitioner and other depositors.
● Serrano argument: there should be created a constructive trust in his favor when the
respondent OBM increased its collaterals in favor of respondent CB for the former’s
overdrafts and emergency loans, since these collaterals were acquired by the use of
depositor’s money.
● CB arguments: CB denied liability for petitioner’s account with OBM. It denied that it
has the duty to exercise a most rigid and stringent supervision of banks; CB is not
guarantor of the permanent solvency of any banking institution as claimed by petitioner;
and there was no constructive trust created in favor of petitioner and his predecessor
in interest Concepcion Maneja when their time deposits were made in 1966 and 1967
with OBM as during the time the latter was not an insolvent bank and its operation as a
banking institution was being salvaged by the CB.

ISSUE: Whether or not Central Bank is jointly and severally liable with OBM for the petitioner’s
time deposits.

RULING: No.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn
interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans
and are to be covered by the law on loans. Current and savings deposits are loans to a bank
because it can use the same. The petitioner here in making time deposits that earn interests
with respondent Overseas Bank of Manila was in reality a creditor of the respondent Bank and
not a depositor. The respondent Bank was in turn a debtor of petitioner. Failure of the
respondent Bank to honor the time deposit is failure to pay its obligation as a debtor and not a
breach of trust arising from a depositary's failure to return the subject matter of the deposit.

Notes:

The Court dismissed the petition for having been filed in the wrong forum.

The nature of the action is in reality are recovery of time deposits plus interest from respondent
Overseas Bank of Manila, and recovery of damages against respondent Central Bank for its
alleged failure to strictly supervise the acts of the other respondent Bank and protect the
interests of its depositors by virtue of the constructive trust created when respondent Central
Bank required the other respondent to increase its collaterals for its overdrafts and emergency
loans, said collaterals allegedly acquired through the use of depositors money. These claims
should be ventilated in the Court of First Instance of proper jurisdiction.

Claims of these nature are not proper in actions for mandamus and prohibition as there is no
shown clear abuse of discretion by the Central Bank in its exercise of supervision over the other
respondent Overseas Bank of Manila